The U.S. Department of Transportation
may hold the key to one of the biggest unanswered questions from Hurricane
Katrina:

Why did it take nearly a week for the Federal Emergency
Management Agency to mobilize private buses to evacuate thousands of city
residents desperately seeking rescue from the horrific conditions in the
Superdome, the Convention Center and the open tarmac of Interstate 10?

Clues to that mystery will come in the form of an audit
into a FEMA contract for hurricane evacuation services awarded in 2002 to
the Federal Aviation Administration. An initial report on the audit, which
was quietly opened last October by the DOT's Office of Inspector General,
is nearing completion and will be released to the public soon, a DOT official
told Reconstruction Watch.

So far, the IG's office suspects that that the FAA
"did not verify that the services were performed," said David
Barnes, a public affairs officer in the Office of Inspector General. As
a result, the IG "has raised questions about the FAA's internal controls."

The audit is also focused on Landstar Express America
Inc. A trucking and logistics company based in Jacksonville, Fla., Landstar
is a politically well-connected corporation that's risen to the top of the
U.S. transportation industry without actually owning any trucks. Chairman
Jeffrey Crowe served until recently as head of the U.S. Chamber of Commerce,
and last April Florida Gov. Jeb Bush appointed him to his Advisory Council
on Base Realignment and Closure.

Landstar managed the evacuation contract for the FAA
under a $100 million subcontract signed in October 2002. The audit "is
an ongoing thing," said Barnes. IG inspectors are still not sure how
the contract ended up at FAA, which manages the nation's air traffic control
system, he added.

The FAA would not comment, and FEMA press officials
did not return telephone calls. A Landstar vice president did not respond
to a request for comment, either.

Landstar, however, has not been reticent to talk about
its profits from the contract. Last October, the company disclosed that
$129.8 million of the $676 million it earned in revenue during the third
quarter of 2005 was directly attributable to its "disaster relief"
contract with "the United States Department of Transportation/Federal
Aviation Administration."

By all accounts, the FAA and Landstar failed miserably
to help the citizens of New Orleans escape from their drowned city. And
when the crisis hit, FEMA, whose bungling during Katrina has become legendary,
was unaware that it had even contracted the operation to FAA, or that FAA
had subcontracted the work to Landstar,

"It's classic government," said Peter Pantuso,
president of the American Busing Association, which represents many of the
companies involved in the evacuation. "There were too many people in
the chain of command."

Adding insult to injury, many of the companies that
scrambled buses and drivers to assist FEMA haven't been paid by the government
for their services, Pantuso told Reconstruction Watch.

"When the government needed these guys, they were
there within 48 hours," he said. "In some cases, they cancelled
other trips so they could step in and help out in what was obviously a national
emergency. I think it's unconscionable that the government can't pay them
within 90 days."

According to Pantuso's group, the first buses commandeered
to move New Orleans' beleaguered residents to safety didn't arrive until
the Thursday after the hurricane hit -- nearly a week after Mayor Ray Nagin
ordered a mandatory evacuation.

Worse, neither FEMA or the FAA appear to have made
any calls to the interstate bus industry in the days prior to the storm
despite widespread warnings from weather officials that Katrina was becoming
a monster hurricane that had the potential to demolish New Orleans and the
Gulf Coast.

FEMA's initial contacts with the private busing industry,
Pantuso recalled, came one day into the storm, when small bus lines in the
Mid-South and East Coast began getting frantic requests for vehicles from
two limousine companies in New York and Chicago that had been sub-contracted
by Landstar to manage the evacuation. These bus lines then called the bus
association to find out if the companies were genuine FEMA subcontractors.

But when Pantuso called FEMA seeking this information,
he was stunned to learn that FEMA itself didn't know this important task
had been contracted out. "FEMA couldn't answer us for days," he
said. (Strangely, on the day of the storm, former FEMA Director Michael
Brown informed Louisiana Governor Blanco that "FEMA has 500 buses on
standby, ready to be deployed," according to internal e-mails released
by the governor's office in December.)

Pantuso's account is consistent with a startling report
that appeared in the Chicago Tribune on Sept. 23. Landstar, which held the
evacuation contract, didn't ask its subcontractors about the availability
of evacuation buses until Aug. 30, 18 hours after the storm hit and a full
two days after Nagin ordered the evacuation, the Tribune reported.

The failure by Landstar, FEMA and the FAA to respond
quickly to the hurricane, the newspaper noted, "underscores a critical
failure in the disaster plan: the inability of government to provide even
the most rudimentary transportation to take people out of harm's way."

In the end, the bus companies did their best without
FEMA's help. In the days that followed the hurricane and the disastrous
flooding of New Orleans, said Pantuso, the bus association and its members
quickly put together spreadsheets of companies with available buses and
dispatched them to the storm zone as quickly as they could.

Even then, FEMA's response was slow and confusing,
according to accounts of the evacuation reported in a special edition of
Destinations Magazine, the in-house publication of the American Bus Association.

One company, Toby Travel and Tours Inc., of Louisville,
Ky., sent two motor coaches and four drivers to New Orleans. Once there,
"drivers had to wait, bus by bus, for clearance to unload their passengers
while ground crews completed necessary paperwork for each passenger,"
Destinations reported. "Some buses that arrived in the same convoy
on Saturday night had to keep their passengers on board until Monday morning."

Another company, Spirit Tours in Glen Allen, Va., called
federal authorities after learning that New Orleans needed buses to help
evacuate people stranded by the hurricane but "heard nothing for several
days." Then, after getting an "urgent plea for help," Spirit
sent two buses and three drivers to New Orleans, "where they sat and
waited with many other eager drivers and empty motor coaches."

Finally, the Spirit buses moved 110 people to Dallas,
where they were told by authorities to continue to San Antonio, 300 miles
away, because the city's shelters were full. "During the nine days
Spirit participated in the effort, its two buses carried passengers on only
one 550-mile run, but the buses, as per the authority's ever-changing instructions,
traveled 3,700 miles," Destinations reported.

None of these accounts mentioned a word about Landstar.
In an interview, Pantuso could not recall Landstar playing any role in his
discussions with FEMA or its subcontractors.

Yet according to Landstar's October earning statement,
the Florida company "was not only able to source the necessary capacity
required for the disaster relief efforts but was also able to source sufficient
capacity to support a 9.5 percent increase in revenue." Landstar President
and CEO Henry Gerkens was "very pleased" with that increase, which
he called "the highest quarterly revenue in Landstar history."

FEMA's record during Katrina contrasts sharply with
how Texas handled Hurricane Rita, which hit the Gulf region shortly after
Katrina.

About a day before Rita's landfall, Pantuso said, he
received a call from the Texas Office of Procurement asking how they could
direct buses during and after the storm. The bus association, using the
spreadsheets it put together during Katrina, did a "blast e-mail"
to companies in about 14 states and "within an hour and a half had
heard from 30 to 40 companies." As a result, that evacuation went smoothly.

According to Barnes, the IG press officer, the government
audit is focusing less on the turmoil and lack of organization of the evacuation
of New Orleans and more on Landstar's billing practices and the FAA's auditing
record. The IG's upcoming report will make recommendations to the FAA so
"before next hurricane season the agency can find a baseline for these
services," he said.

FEMA's contracting-out of the management of its emergency
services apparently started after 9/11, when the agency was folded into
the Department of Homeland Security, Barnes said.

The IG's office explained its audit in a "Management
Advisory" issued Oct. 12. Specifically, it said the IG was auditing
the ordering and payment system of the FAA's Southern Region near Atlanta,
which holds the FEMA hurricane evacuation contract. DOT inspectors, it said,
had discovered major discrepancies -- with estimates ranging from $60 million
to over $200 million -- between the FAA's recorded "obligations"
to Landstar and the "taskings" received from FEMA and issued to
Landstar for providing logistics services during Katrina and other recent
hurricanes.

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